The U.S. trade deficit in goods and services rose by a whopping 22.3% in March to $109.8 billion, the Bureau of Economic Analysis (BEA) said on Wednesday. This marks an all-time high as the U.S. has never posted a goods and services trade deficit of more than $100 billion in a single month. February’s deficit was $89.7 billion, for example.
The deficit with China also rose, transferring jobs, industries, and wealth from the U.S., even as Beijing gives cover to Russia’s war on Ukraine.
The deficit with Vietnam, widely believed to include a large number of Chinese goods, also hit a record high. Moreover, higher U.S. interest rates are drawing in more speculative capital flows into the securities market, driving dollar misalignment higher and causing U.S. companies to lose market share at home and abroad.
“This horrendous monthly trade report represents millions of American jobs shipped overseas. With this record monthly trade deficit, widespread supply chain snafus now expected to last into next year, and China’s totalitarian lockdowns making the supply chain situation even worse, the federal government must look now at reducing U.S. dependence on imports,” said Jeff Ferry, CPA’s chief economist. “The time for commissioning studies is over. It’s time to take action.”
The goods deficit rose again in March.
The goods trade gap rose nearly 18% in March to break another record, hitting $128.1 billion thanks in large part to corporate buyers sourcing from countries where an overvalued dollar provides for much more purchasing power than it does here at home.
A stronger dollar in 2022 has led to a goods deficit of more than $100 billion a month since the start of the year.
All told, March goods and services exports were $241.7 billion, $12.9 billion more than February exports and imports were $351.5 billion, $32.9 billion more than February. The year-to-date goods and services deficit increased $84.8 billion, or 41.5%, from the same period in 2021.
Our goods deficits with China, Germany, and Vietnam all surged in the month, a consequence of America’s post-pandemic thirst for goods, the erratic pattern of shipping, and government policies that encourage consumers to buy imports. The huge deficit with China is driven by the de minimis rule allowing billions of dollars of Chinese goods in duty-free, and the overvalued U.S. dollar.
- The goods trade deficit with China rose to $33.9 billion in March from $30.6 billion in February. China was the source of the biggest gap in the goods trade.
- The goods deficit with the EU rose to $16.8 billion in March from $12.8 billion in February, led by German manufactured goods.
- The Germany goods deficit rose to $6.3 billion from $4.2 billion.
- The goods deficit with Mexico for March hit $11.9 billion, up from $8.8 billion in February.
- Vietnam continues to be a huge exporter to the U.S. The goods deficit hit a monthly record of $10.3 billion in March up from $7.3 billion in February. Most of this is likely China outsourcing partners and Chinese corporations that have set up shop there starting in 2018 when Section 301 tariffs were enacted.
What We’re Buying/What We’re Selling
Imports of goods increased by $32.0 billion to $298.8 billion in March, led by industrial goods and materials; consumer goods; capital goods like computers and automotive.
Exports of goods rose by $11.6 billion to $170.7 billion in March, led by industrial supplies and materials. Automobiles and auto parts also continued to recover and added to the month’s export values, but in both of those segments, the U.S. maintained large deficits with other countries – namely Mexico, Germany, and China.
BEA includes oil here and the U.S. was a big oil and gas exporter in March, adding to the export values.
Top 5 Exports
Pharmaceuticals $7.59 billion $7.95 billion
Industrial machinery $5.9 billion $6.0 billion
Semiconductors $5.58 billion $5.49 billion
Automotive parts $4.90 billion $4.72 billion
Passenger cars $4.40 billion $3.91 billion
Top 5 Imports
Pharmaceuticals $15.77 billion $15.10 billion
Passenger cars $14.21 billion $11.69 billion
Cellphones $12.06 billion $12 billion
Automotive parts $11.12 billion $10.39 billion
Computers $10.79 billion $9.25 billion